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Can cst/vat be adjusted

14 March 2013

Dear Sir,

Please consider following scenarios:

1) Manufacturing company pays 2% CST on Raw Materials. Can it adjust against VAT payable on finished goods within state sales?

2) Manufacturing company pays 2% CST on Raw Materials. Can it adjust against CST payable on finished goods sales outside the state?

3) If a company has head office in New Delhi and has branch in Gujarat & Uttar Pradesh. Goods are purchased from Gujarat and Sold in Uttar Pradesh. Is it correct that we have to pay 5% VAT in Gujarat and 5% VAT in Uttar Pradesh. Total = 10%?

4) If a trading company pays VAT on purchasing goods and then makes an inter-state sale using a C-Form. Can 2% CST be setoff by 5%Vat which means only 3% has to be paid in the end?

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11 Replies

Santosh Shetty (IPCC, Asst Manager) (200 Points)
Replied 14 March 2013

Hi Sharique,

1. No. You wont get any credit / setoff for CST paid on purchases, It should be added to net purchase.

2. Again No. CST paid on purchases can not be adjusted against CST payable. But if you have excess vat (Input vat less output vat), then you can adjust the same with CST payable.

3. Assuming you have separate billing locations at Gujarat & New delhi, you will get credit for input vat for goods purchased from Gujarat & since you will charge output vat for goods sold at UP, question of 10% does not arise.

4. Yes you can. You will be still having 3% credit (5% input vat less 2 % CST)

Dear experts - Please correct me if I am wrong & adivice me & Sharique accordingly.

Thanks

1 Like

Sonu Kumar (Account Manager) (665 Points)
Replied 14 March 2013

1. no

2. no

3. For Purchase in Gujrat You Will get Input Tax Credit @ 3% (2% Retaintion for Stock Transfer) and you Will Charge Local Vat @ 5% in Utterpradesh Total Vat Payment= 5+2 = 7%

4. Yes You Can Claim Vat Input from CST output...... Still You Have 3% Excess Credit, Claim it From Vat Payble

1 Like

Sharique Maqbool (Others) (56 Points)
Replied 14 March 2013

Thank you Mr.Shetty and Mr. Kumar.

Furthermore, I would like to ask if there is excess 3% VAT (As in case 4) - Can it be setoff against CST Payable on raw materials (As in case 2)?

Santosh Shetty (IPCC, Asst Manager) (200 Points)
Replied 14 March 2013

Yes you can reduce the cst payable amt from the excess input credit.

Raviraj (B.Com) (26 Points)
Replied 15 March 2013

WHAT IS PROCESS OF CST FOR C FORM APPLICATION

Sonu Kumar (Account Manager) (665 Points)
Replied 19 March 2013

Yes You Can Adjust Input Tax Credit with CST Payble

Sharique Maqbool (Others) (56 Points)
Replied 27 March 2013

Thank you Mr.Shetty & Mr.Sonu.

I would like to know if the VAT paid on purchase is refundable in full and complete in case of stock transfer or interstate sale? Is complete 4%/5% refundable/adjustable or anything paid in excess of 4% is only refundable? I am asking this because of the below excerpt from white paper-

"Even for stock transfer/consignment sale of goods out of the State, input tax paid in excess of 4% will be eligible for tax credit."

Nandhini (Director) (25 Points)
Replied 11 February 2014

Sir, We pay input VAT 5% for certain goods & do interstate billing for CST 2% against C form. We will pay the 2% CST. Shall we adjust the whole 5% Input VAT against Tax Payable

Rakesh Singh (MBA) (21 Points)
Replied 16 June 2015

Sir,

My question is what do we do with the (cst on sales - cst on purchase) ? Is it adjusted with the VAT ?

rajnarsimha (accountant) (24 Points)
Replied 21 August 2015

Dear Sir

Please give me solution to my query I have excess VAT (Telangana State) credit amount Rs.200,000/- in form 200, CST Liability Rs.100,000/- by mistake am transfered total VAT credit amount to CST (Form IV), now can i adjust this Excess CST amount to current CST Liability?